NCAB Group AB (publ) (NCAB) Earnings Call Transcript & Summary

Welcome to the NCAB Q2 Presentation for 2025. [Operator Instructions] Now I will hand the conference over to the CEO, Peter Kruk; CFO, Timothy Benjamin; and Head of Investor Relations, Gunilla Ohman. Please go ahead.

Thank you very much, and welcome, everyone. My name is Peter Kruk, and together with Timothy Benjamin, we will be presenting the second quarter results for NCAB Group. Starting point, NCAB, we are a company focused on supplying printed circuit boards. Printed circuit boards are the foundation that you see to the left in all electronics, which forms the brain in any intelligent product. And what is unique with our product is that every PCB is unique to the product in which it is used. So there are no standard components, but everything is our engineered product where we provide a value to our customers, both in the design phase as well as through the supply of products. As a company, we are operating globally with a strong local presence in 19 entities. We are serving some 45 markets, and we are around 645 employees. And we use some 36 main factories to supply our customers with different technologies and from different geographies. We don't own any in-house manufacturing. In fact, we're using only external partners, and which makes us flexible in order to support our customers in varying needs, both in terms of technology, but also always being able to give our customers the best supply chain possible for their specific needs. If we then move over to the -- specifically the second quarter. So, I'm glad to see that we have another quarter of positive order intake. We have had in the second quarter a very significant headwind from the weakening dollar, as the dollar has dropped roughly 10% since Q1. But if we look upon the order intake, we continue to have a second quarter of growth in order intake for the group. The continued positive development in Nordic and East has continued, and we also sort of see actually Europe to show order intake growth in U.S. dollar. U.S., well our order intake in the U.S.A. was weak compared to last year. But beside the FX, this is partly due to the tough comparables that we've had in the quarter. Q1 for us was very strong. So I'll come back later to show that full year status. Net sales also devalued by the U.S. dollar movement, but we see growth in the dollar terms in all regions, excluding Europe, which is still down. So it's lagging a little bit from the order intake. The impact of U.S. dollar on net sales is around SEK 90 million in the quarter. Gross margin remains stable, improving slightly versus Q1, but the EBITA is impacted by the weak dollar. The EBITA would have been some SEK 17 million higher, excluding the U.S. dollar impact. M&A activities, as we have reported earlier, have continued. We were able to close the acquisition of B&B Leiterplattenservice in Germany here earlier in the spring, and that integration has now commenced. And we have also during the quarter renewed and increased our financing for -- at better terms and with the validity until 2030. If we look more specifically on the numbers for the quarter, we can see that our order intake in Swedish krona is up by 5% to SEK 985 million. If we look upon U.S. dollar, the order intake is up some 16% versus last year. And it's also positive that we have a book-to-bill of 1.05 in the quarter. Net sales are stable in Swedish krona versus last year. But if we look upon organic growth, excluding acquisitions in U.S. dollars, we're actually seeing organic growth of 8% in the quarter. EBITA, as we said, is impacted by the FX. So we are down to SEK 94 million or an EBITA margin of 10%. Gross margin has gone down versus last year, where we had extraordinary margins in the first 2 quarters of the year, but we are moving up slightly from our Q1, we were at 34.7%. And as we mentioned, the negative FX is SEK 17 million in the quarter. Cash flow, good at SEK 93.6 million in comparison to last year's SEK 101 million. Our working capital is up slightly. We are up partly due to the acquisition of B&B, and we also see some effects from the tariffs in the U.S. impacting working capital there. A little bit more information briefly about like B&B Leiterplattenservice, is a company based in Eastern Germany with its main customer base also in Germany. It's a company that was started in the 90s and was running production up until 2022. That means the company has a very deep knowledge around technology for manufacturing, which is also valuable in the dialogue with customers. Revenue in '24 was around SEK 150 million, and they had an EBITA north of SEK 20 million in that year. And with the company comes some 25 employees predominantly in Germany, but also in China. And the transaction was announced and signed on April 23rd, and it was now closed on June 3rd, so it has contributed somewhat in the quarter. Then I give it over to you, Tim, to continue.

Thank you, Peter. So I think you heard a little bit from Peter that we had sales of around SEK 934 million in the quarter, and fairly flat with quarter 2 last year. However, when you look at it in U.S. dollars, which is more of a fixed currency comparison for us since we do so much trading in U.S. dollars, we were up to 10% year-over-year growth with M&A contributing nicely as well. We did have an EBITA at SEK 93.9 million, down 22%. And you heard a little bit from Peter that some of the impacts there were both FX and then also a little bit of price product mix. So we ended the quarter at around 10% or about down 2.9 percentage points. If you look at our gross margins over time, we're running at around 36% last 12 months, and that's compared to around 36%, 37% for the past 2 years. But in the longer term, we've been able to drive up gross margins quite nicely. When we turn our heads then to order intake and sales, it was really nice to see the order intake increasing 5% year-over-year to SEK 985 million. But again, in a more fixed currency comparison with U.S. dollars, it's actually up 8%. We did see some very nice positive indications on the Nordic side as well as Europe and also on the East and then a little hesitation on the North American side with all the tariff movements back and forth in that country. As mentioned, net sales were flat for the quarter and that presented the third quarter in a row of positive book-to-bill, which we are happy to see as well as a good trend in new part numbers in customers won. When we then look at the results, as said, we were down to around SEK 94 million. That's partially an impact of the lower U.S. dollar in total SEK 17 million, but then also around SEK 22 million coming from a negative translation effect as the U.S. dollar weakened, offset by a little bit of positivity on the balance sheet revaluation of SEK 5 million. And the balance sheet revaluation is something that isn't expected to repeat. It really just has to do with how much AP and AR we have on the books in U.S. dollars at the end of every quarter, whereas the translation effect is something that we expect to continue wherever the U.S. dollar is. So that one continues forward. EBITA margin, as said, 10% with a gross margin slightly improving over quarter 1. But we did see gross margins decreasing year-over-year, which was mainly attributable besides FX to the pricing and product mix, which was quite elevated in H1 2024. And then we thought we'd give you a little extra detail here since we do have big FX movements within the quarter. So if you take a look at the U.S. dollar compared to prior year, down around 10%, so down to 9.66 on average during the quarter versus 10.68 last year. So that gives us a full SEK 90 million impact on revenue. And as we've said for a while now, we tend to have our revenue coming from the prior quarter's order intake, and when you have a prior quarter order intake, that translates into a different exchange rate, you tend to get impacts like this. So we saw a SEK 90 million impact on revenue versus prior year from FX. And that then resulted in around SEK 27 million total impact to gross profit, of which minus SEK 32 million translation and plus SEK 5 million on the revaluation side, which again, the revaluation side is the one that's not expected to repeat, whereas translation we do expect to see repeating as long as the U.S. dollar stays this low. And then SG&A also repeats and that was at a positive SEK 10 million as some of our SG&A converts into less SEK. That gave us a total EBITA impact in the quarter compared with the prior year quarter, quarter 2, at the higher exchange rates of around minus SEK 17 million. With that, over to you, Peter.

So if we look a little bit closer to the segments, I mean, we can see Nordic has had a fantastic order intake in the quarter being up 15% in SEK and around 26% in U.S. dollars. I think positive development in a number of the countries, and I think like Denmark, but we've also seen good orders from aerospace and defense, but this also means that some of the order intake that we've seen now will have a longer digestion time. So will primarily -- or part of it will primarily impact 2026 rather than the second half of 2025. Net sales up 4% in Swedish krona to SEK 250 million versus SEK 207 million last year. EBITA around SEK 23 million versus SEK 29.6 million, and margin down to 10.7% versus 14.3% margin last year. We have significant FX in the quarter. As Tim highlighted, both the translation part, but the revaluation part has hit different segments differently. So whilst we have for the group a positive of [ SEK 5 million ], we actually have a negative in the Nordic segment, but positive more in the European segment. So FX or EBITA would have been on par or better than last year's EBITA had we not had the FX in the segment. So Nordics doing quite well operationally. Looking at Europe, we can see here -- positive here actually that the order intake started to grow, and that we also see positive order intake in development in U.S. dollar. Europe has been the segment lagging in the turnaround, and we're positive to see that this is changing in U.S. dollars, even though we have to say that there is uncertainty in a number of our markets, also in Europe, not just in the U.S. from the tariff situation and what this may impact the general demand sentiment. So some hesitation in the market, but still positive that we are showing growth on the order intake. And some countries like Spain and Benelux have been more clear in their turnaround. If we look upon net sales, we are here still lagging behind. We are down 7% in Swedish krona. And organically, if you then take away the impact of the acquisitions, we're actually in Swedish krona down still 18% versus last year or 9% in U.S. dollar. And there -- here, of course, there's one part, which is the time lag between order intake development, which is positive and when it translates into revenue. And we can see that, say, the markets where we are still sort of trailing behind primarily are some of the bigger ones like Germany, Italy and the U.K. But hopefully, that order intake trend will start to move the needle here as well. So EBITA is down quite significantly to SEK 33.6 million versus SEK 56.7 million, and it corresponds to a margin of 7.6% versus 12.0%. And so the decrease is -- say, a big portion of this is coming from the revenue, further enhanced by the FX, but then also some product mix and pricing. If we then look on North America, here, I think we're doing quite okay. Order intake is showing a big decrease versus last year. Besides FX, there's also here quite a bit of kind of timing activity of larger orders. We have -- we were up 18% versus prior year. So if you actually look upon the full year, we are 9% up in U.S. dollars. So it's more -- some part of this is timing, but there is also a little bit of that anticipation or hesitation in the market from the -- depending on the tariff situation. And also to remember is that the tariffs are not booked in the order intake as they are only visible or only become known when they are actually imported into the country products. So we will have tariff showing up as part of net sales, but not in our order intake. If we look upon net sales, here, based on the order backlog we've had, we've had a good sales increase. We are up 12% to SEK 225 million versus last year of SEK 200 million. And here, we've been successful in transferring tariffs to customers, but we're also very well positioned to benefit from our global supply base. I mean, NCAB has over the years invested in building a factory network also outside China in various parts of Asia and other parts of the world. And this is a big strength for us right now being able to help customers who may want to ship their supply. Right now, there's still a lot of discussions ongoing and many customers still waiting a little bit because there are still, say, a lot of the tariffs that are up for discussion and are not confirmed. And since moving production is a big step for many of our customers, it means that, say, many are in the kind of holding position to make those switches. If you look at EBITA, we are up to SEK 32 million, up versus SEK 28.1 million last year and our EBITA margin stable at 14.2%, up then from quarter 1 and on par with last year's 14.1%. If we then look finally on our East segment, also here, positive to see that we see growth in order intake despite the FX movement. So the order intake in U.S. dollar is up a full 12%. And I think we are -- the market is starting to grow in high tech. And I think it's -- we are able to capitalize on our supply base. We have a strong network of factories in this area and are able to sort of provide good service to customers. Net sales decreased 2% to SEK 54 million, but in U.S. dollars, we're up 7% in revenue. And our EBITA is down a little bit to SEK 9.5 million versus SEK 11 million, but there still a very healthy EBITA margin of 17.4%, and this is a little bit of a mix situation. And I think we continue to be able to drive high margins since our East segment is the area where maybe we are doing more engineering support than other regions for high tech applications. Over to you, Tim.

Thanks, Peter. So return on equity, 13.5% versus 26% prior year. As you can imagine, that's just linked to the EBITA development between the 2 last 12-month periods. Net debt sitting now at SEK 1.8 million versus SEK 1.1 million last year and up a couple tens of basis points from prior quarter, I believe, SEK 1.6 million in quarter 1, and that has to do with the acquisition of B&B that we completed during the quarter. Equity-asset ratio stable, slightly higher versus prior year at 40.7%. And then working capital also sitting at about SEK 353 million or 9.2%, which is a little bit higher than last year and a little bit higher than prior quarter. But again, as mentioned, we had the B&B acquisition during the quarter, which increased both those 2 numbers as well as the impact of the U.S. tariffs impacting both as well. Available liquidity at SEK 1.26 billion as well as options to increase that as well ready to go. And then, as mentioned before, no dividend expected for the year.

[indiscernible] Tim?

So on the M&A side, I mean, we continue with our strategy to explore opportunities for M&A, and we have a good pipeline of potential companies which we have kind of filtering down and we remain with a kind of a short list of some 50 companies that we feel are a good -- be a good fit for NCAB. And we are in dialogue with some 5 to 10 companies on a continuous basis. And as we said before, we closed B&B Leiterplattenservice here in -- early in the year, and we are hopeful that we can find some other opportunities that can close in the coming quarters. If we look upon our overall strategy, we remain 100% focused on printed circuit boards. We also believe in the model of having an asset-light model where we do not have in-house manufacturing. It gives us flexibility to really have the best service for our customers and be flexible and move with varying market needs. So we are instead focusing more on continuing how we can improve the support for our customers in this market with engineering services and other ways of making our customers more efficient and by that, growing our market shares in existing markets. We're also looking how we can expand geographically. We believe very much in being local to our customers. There's a big value of that local interaction with our customers and looking to expand into new markets. M&A is an important part of taking those steps into new markets. And finally, it is also a market with a high degree of fragmentation, and we see benefits in consolidating here and looking for economies of scale, both in terms of developing stronger capabilities, but also in terms of find efficiency and cost advantages. So this is something we'll continue with and our M&A strategy serves both the consolidation aspect as well as the geographical expansion. And with that, we close today's presentation and open up for questions.

[Operator Instructions] Next question comes from Jonny Jin from SEB.

I want to start a little bit in North America and understand the demand and impact from tariffs a little bit better. I suppose that you increased the prices and push that on in the U.S., which is reflected in the sales. But if we break it down a little bit, how would you say -- if you could elaborate the underlying demand, how that is developing? And I mean, it's a lot of moving parts, but book-to-bill is quite a lot below 1. And again, I know that the tariff is not reflected in the orders, I suppose, but how is the underlying demand and the sentiment in the U.S.? And how is the momentum going into Q3 here, if you could say some words there?

I'd say it is a challenging situation to understand exactly what the sentiment is. I think there is, say, some concern in the market given the uncertainty of what happens with tariffs. As you know, there are a number of tariffs being discussed also with Taiwan, South Korea, Japan, that are still up in the air. And I think that creates a level of uncertainty. We have still seen pretty good order intake, but I think there is always a little bit of that anticipation which makes it hard. And maybe not specifically on our products, but it's more on end consumer products where, for instance, you could see truck industries and others where, say, people are holding off on making, say, bigger capital investments. So I'd still say that our order intake has been pretty good. The drop in quarter 2 versus last year, it's largely timing of larger orders. If you look back, we see we had a very strong Q2 last year. And I think this year, we also had bigger orders coming in, but they happen to be more in Q1 this year. So I think it's a little bit of timing of those bigger orders than to say that it's related to, or say, a general drop in the market. But there is a level of uncertainty. And I think there's also this still [ sort of ] partly impacting European sentiment as well. I think we can see that we are coming to a turnaround where maybe the European markets have bottomed up and the inventory buildup after the pandemic is starting to come out of the system, which is improving things. But I think the whole trade war with tariffs has made everyone a little bit more hesitant and maybe means that the recovery is coming a little bit slower in some of these markets. But we don't see, say, big shifts. I think it's maybe more of a little bit of anticipation at this time.

Okay. Yes. And just a clarifying question. The timing of those -- some larger orders that you see, did you mean that they came in Q1 already or that the timing is that they can be pushed to Q3?

No, I think what we had, we had -- if you look, say, both last year and this year, we've been running certain projects with research customers, which comes more in kind of projects. And we've had -- last year we had a number of those being booked predominantly in Q2 of those orders, whereas this year we had similar orders coming in, but we had them predominantly in Q1. So if you look back, our Q1 was way above '24 Q1, and Q2 now we're a little bit below. But if you look at first half, we are still up in U.S. dollars by some 9% in order intake in the U.S. So I think that -- sort of those bigger orders plus the FX makes a big part of that sort of shift in -- or the drop in the order intake.

Okay. Yes, that's clear.

And of course, we hope to see more orders like those research orders coming, but they are a little bit harder to predict when they come. They're kind of intermittent in their nature.

Yes, yes. I understand. I understand. But then the underlying book-to-bill in North America, maybe we can look at over a little bit longer period? Or what is the best estimation for the underlying book-to-bill, would you say?

Yes. I think that the trend that we have seen in the U.S. with, say -- I think U.S. was one of the markets combined together with East to start the recovery on order intake during '24. And I think that situation is still healthy. I think the turmoil with the tariff et cetera maybe has made the U.S. market slow down a little bit, but we're not seeing it break in at this time.

Yes. Okay. Yes, we'll see. It's a lot of…

Yes.

[ It's kind of closed off ]. If we shift focus here to the gross margin a little bit, it's a lot of moving components here as well with the price and mix and tariffs and FX and so on. So what is the underlying gross margin here in the quarter, would you say? And what can we expect forward? I mean you mentioned the mix, but would you say that mix is representable for Q2 or for Q3 as well here in Q2? Or how should we think going forward?

I think overall, I can start -- I think overall, I think what we have said before is that we believe probably a reasonable gross margin that we can maintain is somewhere in that range, 35% to 36%. And I think we believe that is to be true. I think in Q1, we were -- we had more of a revaluation impact, which actually hits gross margin percentage as well, whereas say, translation doesn't really impact the percentage of the gross margin so much. So I think -- we think we are pretty stable. I think we also knew that, say, during latter part of '23 and early part of '24, we had sort of extraordinary gross margins, partly due to just kind of timing of purchase price movements and customer pricing, which gave us a few quarters with, say, a boost to the gross margin. But I think that 35%, 36% is probably more stable to be sustainable at, at least for the midterm.

Yes. Yes. Okay.

I would agree. I think 35%, 36% is quite reasonable. You'll always have timing effects when it comes to revaluations or, for example, M&A, but other than that, yes.

Yes. Yes. That's clear. And then shifting focus to Europe. Order seems developing well there with orders coming in above 8% of our sales in the quarter. So could you maybe elaborate a little bit more what is driving this? And I think that you mentioned also some early positive signs of recovery in Europe already in Q1. So has this developed as you expected, would you say? Or has there been any shifts? And how is the gut feeling? Or what do you hear from the dialogues of your customer and the best guess of the outlook in H2?

No, I agree. I think there is a -- I think we saw the trough of Europe in the second half of last year. In Q1, we started maybe to see some signs on order intake moving in the right direction. And I think those signs have kind of continued into Q2, maybe coming a little bit stronger, maybe some more markets starting to show progress, but it's still quite sort of weak growth in Europe. And you have some markets where we see sort of -- where we're still somewhat challenged. I think U.K. is a market where the economy is maybe more challenged. And we also through our U.K. business are sort of partly involved with the truck industry, where you see, for instance, a truck industry order intake slowing down. So I think there are some things there in Europe where we still see some challenges. But overall, I think we are slowly starting to climb out of that trough in Europe. And I think that's happening kind of stably across the board right now. And I think we can see, if you look upon German trading or German manufacturing PMI indexes, you can actually see that they're now starting to climb up. They are still showing actually negative in June. But they have now climbed down from kind of low 40s up to 49. So it's a clear trend where they are approaching a general growth in German manufacturing industry. So I think this is what we're seeing as well. It's not yet booming in any means, but we start to see pockets and -- of growth, and I think we are benefiting from that.

I think we also saw some very good performance [indiscernible] as well.

Yes. So cautiously optimistic, if I interpret you correctly.

Yes. I mean you can say we have momentum in a couple of other segments. I think Europe is starting to sort of turn around, but maybe we don't really see a strong momentum yet, but positive at least that we're making steps forward.

Yes, yes. And then one final one, sorry lot of questions here. But on the cost and OpEx side of things, do you see more cost -- underlying cost reductions ahead to help the EBITA margin going forward? Or do you think that you will need some help from the market and higher volumes to drive the margins going forward?

You can say we are, say, continuously look to find steps of making sort of things more efficient. At the same time, we are also in the process right now where our order intake is growing. So we are at this time not looking to kind of downsize for lower volumes, which is a different story.

Next question comes from Jacob Edler from Danske Bank.

I'm just getting back a bit to tariffs to start with. If I read the report correctly, order intake grew 8% in comparable units in U.S. dollar. But as you stated, it does not include tariffs as we spoke about a bit. If I was to shout out the number and guess that, if I was to include that, that could have been like 3 percentage points on growth year-over-year. Does that look -- sound like a half reasonable number? Just trying to understand the-ish magnitude.

I'm not sure, Tim, if you have the number or…

Yes. We're not looking to give out exact numbers on tariffs. But yes, there was a small effect somewhere in that range of tariff that we had. Yes.

Perfect. Perfect. And a second question also on order intake. But I remember last year, you had, what was it, 6% of sales coupled to defense and aerospace. And -- but you have stated that order intake was a bit stronger, a bit above that number last year. And I believe most of those deliveries were set to be seen in sales during the course of '25. So I'm just wondering, did we see any defense sales bookings here in Q2? Was there any big increases year-over-year there? Or is that something to expect more for H2, those delayed bookings, so to speak?

I think we do have some of it in the Nordics, but I think we're predominantly -- some of the bigger orders that we booked during, say, Q2, Q3 of last year, I think was predominantly -- will predominantly start building during the second half of this year.

Okay. Cool. And -- yes, okay. Great. Just getting to, I guess, during the last week here or yesterday, actually, we had some, I guess, positive news from Germany with the stimulus programs being increased and almost doubled, if I read it correctly. Do you think that can kind of help the recovery here ahead? Or how do you think those programs could impact you guys?

I have not had the time to analyze specifically [ what ] the programs entails. But I think generally, to say the fact that the German manufacturing industry would benefit and see a pickup, I think that would clearly have a benefit for us. So I think it's something we would anticipate and look forward to.

Yes. Great. Great. And then just for East, you stated that you saw some price increases finally coming through. Are you able to add any flavor of the magnitude? Is it a low single-digit number we're seeing now coupled to those, or connected to those high-end tech products?

I think the price increase that we're seeing now is not specifically for East. But I think what we're seeing is -- I mean, you have -- in some tech areas, the factory loading is growing. So I think the tendency for price aggressiveness from the factories is coming down and prices maybe will start moving up. But we have seen -- where we have seen specifically price increases, which we are also now starting to push on new orders here in the second quarter is more specifically related to certain areas where you have, for instance, we have gold. So you have certain technologies with ENIG of gold surfacing, et cetera. And given the gold price movement there, there are price increases which may be in the high-single digits or even above or somewhere 5% to 15% on some product areas. But it is in select product areas. So the impact on the total number is still quite small.

Great. And the last question from my side. Just looking at the margins in North America here sequentially, we obviously had quite poor margins in Q1. How much -- is that delta sequentially mainly related to mix from Phase 3 sequentially? Or are there any elements of you guys being more prudent with costs given the tariff situation during the quarter?

I think it's more of a question we have good -- we have also good revenue in the quarter, which helps a lot. I mean we -- we had SEK 225 million now versus SEK 190 million or SEK 187 million in last quarter. So I think the volume translation with that gross margin creates a great leverage, so -- which is also the key for us as a group that the volume development is important because I mean, we are still in many parts like Europe operationally running sort of significantly below volumes where we historically have been. So if we can see a pickup in some of the key European markets, we should see a good leverage on that volume increase.

Next question comes from Gustav Berneblad.

It's Gustav Berneblad from Nordea. I thought maybe if we can start on the margin in Europe. And just -- it would be interesting to hear your view on that development here? I mean you comment slightly on product mix and also price. So if you can just elaborate a bit on the margin there in the quarter and possibly also quantify the impact from that specifically? And then also, I mean, are you saying that you're seeing also price pressure in the market? And is that something more structural that we should extrapolate? Or -- yes.

I think you can say that we -- for sure, there is a general price pressure in the market has been for some time here given that the market has been quite sort of low in '23, '24. So, I think the price pressure is there. And I think specifically, as we've highlighted that we had very -- we had good margins in the beginning of 2024 overall as there were some timing effects partly on purchase prices from factories as they were coming into effect versus for customers, which kind of gave some boost. And I think Europe benefited from that as well. So I think that is one big part of it, that -- I mean the whole group is still down around 3% versus last year. So that is a big part. And then you have, of course, a significantly lower volume in the European segment compared to last year. Even if in SEK, it looks pretty stable, but then you have to factor in the fact that you have some acquisitions adding to the existing volume. So the organic drop is, of course, much lower than in the European -- in the local sales numbers or in Swedish krona.

Yes. And I would say just to add a little flavor to that, a lot of the pricing and product mix development that we had compared to our margins this time last year, that was happening late last year more than it's happened sort of within the quarter. So that's something that's been happening a little bit over time, not so much lately.

And then, of course, to remember is, which contributes as well is, I mean, when we talk about that we have impact on FX, we have some SG&A savings, but of course, they are all in -- more or less in the U.S. and our East segments where we have costs in dollar, whereas Europe, the FX drop of sales related to dollar hits directly versus in SG&A, which is largely fixed. So you see that impact very clearly on the European and Nordic segments.

That's very clear. And then, I mean, if we look sort of at the average 4-year margin in Europe, I mean, it's been 12%. Obviously, it's been quite healthy margins. But I mean, I understand you probably don't want to guide on anything, but how do you look upon that number sort of going forward, I mean, once sort of we see a normalization in the market, et cetera?

I think you're right, we don't guide here. But maybe one thing to remember around Europe is they are a little bit lower than the historical average, as you point out. But we do expect to see them grow with some pretty decent leverage as well. So just remember, they're at a bit of a low point. I don't know if you want to add any color there, Peter?

Yes. I mean if you look sort of over longer terms and if you factor out, say, pandemic boost, et cetera, I mean, typically, what we should expect is, let's say, Nordics and East are probably the segments that based on, say, mix and technology mix, where we expect maybe to be able to be sort of stable, sort of to be able to perform north of 15% over time, whereas say Europe and North America maybe to be somewhere between 10% to 15% in the longer term. And I think Europe right now, as you said, Tim, is the one that is hit by the lower revenue. So the under absorption of cost structures there means that we are now sort of struggling. We are kind of back to below 10%, but we expect to come back north of 10% over time, depending on how the market develops is how quickly that can happen.

Yes. Perfect. That's very clear. And then I thought maybe you -- if we could focus a bit on your comments regarding taking market shares in the report, you say both organically and through M&A. I mean if we take the organic part, I mean, you have commented quite recent, or recent quarters that you're taking or won a lot of articles, et cetera. And I guess maybe if you can just give us a bit more conviction in the organic part as the market is a bit volatile? I mean what are your basis on this? Is it that you actually see competitors go bankrupt? Or are you seeing customers or new customers that come to you or -- yes, anything there would be helpful.

Well, I think the different parts that we see of course is the trend we see in new customers starting to buy from us, the amount of new part numbers that we are winning, even though in some cases, we are still -- we know that we are running at maybe, say, lower volumes per part number than what we did a few years back. So we can see the positive trend that we are eating into new customer positions. But it's also positive to see that we now start to see an order intake, which is kind of up 8% in U.S. dollars even organically or even -- or 16%, including acquisitions. So I think -- that I think we don't have market data right now regarding the market development here in '25. But I think we believe we feel comfortable that we are in a very good progress here overall in our growth on the order intake side.

Yes. Perfect. That's very helpful.

It is tricky. It is somewhat tricky to find exact data on the different markets, but I think we feel quite -- we feel that we're in a good position here to continue to develop well.

No, that's perfect. And then, sorry, just one last one here. Also, if it's possible to give any sort of ballpark numbers of the impact of the higher freight rates here in the quarter? And also, I mean, assuming sort of stable rates from here, should we also expect a negative impact in Q3? Or what's your view there?

We actually saw a slight positive development on the freight rates versus quarter 1 year-on-year still a negative effect. And I would say, without giving any specific guidance, we do still see some lagging effect on the earlier part of quarter 2 from the higher costs that were coming through on items from quarter 1, but no large material changes expected.

There are no more questions at this time. So I hand the conference back to the speakers for any written questions and closing remarks.

So we have one written question from Philbert Veissieres, LFDE. And he asked what is happening between the -- given what is happening between the U.S. and China, do you foresee at some point reshoring of PCB production in the U.S. in the near future? Peter?

Yes. No. Thank you for the question. At this time, we don't see any such movements or indications at all. I think what we are seeing is potentially that manufacturing is moving potentially from China out to other parts of Asia. So I think we are seeing investments in manufacturing capabilities in Southeast Asia, countries like Thailand, Malaysia, et cetera, which potentially is a next term sourcing ground. What we see -- however, where we can see impact from the U.S.-China implication and trade wars in general is that you may see more nearshoring of final assembly. And that, of course, could be something which could be beneficial for our relationships in North America that you see more customer activity, but we don't see manufacturing of the printed circuit boards themselves move to the U.S. Same thing with Europe. We don't see a shift in more investments in PCBs, but more pickup of assembly work, I think nearshoring of assembly work. That I think there's a trend of, but not of the manufacturing of the printed circuit boards.

Okay. Thank you, Peter. And that was all for today. I just want to remind you that our…

I think there's one more question actually. I think there's one more question from Anders Rudolfsson.

Sorry. Yes, that's right, came in now. Anders Rudolfsson of DNB Carnegie asked, do you see any indications of new fabs in the U.S.? That's the same question.

I guess it's probably the same question actually, yes.

Yes.

So we don't see any investments in manufacturing capability right now in the U.S.

Well then, thank you, all, for listening in, and our Q3 report is on the 24th of October. Thank you, Peter and Tim.

Thank you.

Thank you, everyone.